In today’s financial world of extremely large buybacks and gargantuan price to earnings multiples on well-known growth stocks, there is still one place where an investor can experience real, concrete appreciation and that comes in the form of dividends. The main goal of individuals who work in the investment business should be to earn or compound money for their clients, customers, or shareholders. Too often, dividends are neglected and decisions are made to allocate capital to areas that do not benefit investors in the long run.
To highlight just how important dividends are to an investor’s return, let’s take a look at the historical return of the S&P 500 and the components producing the return.
Historic components of return in the S&P 500 (Shiller):
Dividend Income 4.4%...